Executives of First Horizon National Corp. on Thursday identified lending and efficiency as two areas where they need to make improvements.

In a conference call with analysts, executives acknowledged that they have a ways to go to grow loans to compensate for the continued shrinkage of their portfolios. Total loans dropped to $16 billion in the first quarter from $16.8 billion in the fourth quarter. Executives said $286 million of that decline occurred in areas the company no longer considers strategic.

They agreed with analysts who argued that the company's efficiency ratio — now at 79% — needs to be lowered.

"This is something that we're absolutely as focused on just as hard as we did improving our capital position," Chief Financial Officer BJ Losch said.

Overall, bank officials trumpeted the quarter as proof of the bank's strength. First Horizon handily beat earnings estimates on Thursday, but posted diminished revenue.

"We started out 2011 on our front foot," Chief Executive D. Bryan Jordan said.

The company reported a $40 million profit in the first quarter, reversing a $49 million net loss last quarter. But the company's overall revenues fell to $370 million, down from $424 million a year ago and $388 million in the fourth quarter. Much of the decline was housing related, in that the company's loans to mortgage companies were down.

Credit quality improved markedly. The company's loss provisions fell from $45 million to $1 million, and net chargeoffs fell $23 million to $77 million.

On the call, several analysts asked about possible M&A plans for the bank. Jordan said that while making an acquisition wasn't out of the question, First Horizon is not actively seeking to drum up deals.

"We are very focused internally on blocking and tackling, and we're perfectly content to focus there," Jordan said. "Assuming the right transaction at the right price doesn't come along, we're perfectly content working on the execution of the business."

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